Samsung SDI battery

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Samsung SDI is still reeling from the collateral damage caused from fires that affected  Samsung’s Galaxy Note 7 devices around the world. Samsung SDI is an affiliate of Samsung Electronics whose major business is to make batteries for smartphones including Samsung phones.

Samsung SDI battery
Samsung SDI products on exhibition

The company was created in 1970 as a partnership with NEC of Japan to designed and manufacture vacuum pumps. With later expansion, Samsung SDI added the production of TVs, smartphones screens and batteries to their core business.

The growth of Samsung phones as the biggest smartphones maker in the world impacted very positively on Samsung SDI as the company also became one of he biggest manufacturers of batteries for smartphones. Their customers include iPhones maker, Apple.

When Samsung decided to recall the Note 7 at the beginning of the crisis, the batteries of the phones were blamed for the fires. This of course had a serious impact on Samsung SDI.

They became known as the company that made faulty batteries that cost a company billions of dollars.

Samsung SDI battery
The unfortunate Samsung Galaxy Note 7

However, even after the replacement Note 7 with different batteries made by Amperex Technologies of China also caught fire, the damage to the reputation of Samsung SDI was not mitigated.

One would have thought that the batteries were not responsible for the fires since a different battery from a reputable battery maker also caught fire.

For Samsung SDI, their major problem was how to convince clients around the world that their batteries are safe. And they really need clients to belief in them because, before the fires, they were thinking of expanding into making batteries for electric cars.

The figures on the financial side of things make for grim reading. The company lost about about 20% of its value on the stock exchange. And financial result of the third quarter show the company made a loss that was more that double the losses it made at the same period the previous year.

Samsung SDI battery
Burnt Note 7 beside an unaffected one

And just to show how unfair the world is, the Note 7 fires have had little impact on the value of Samsung Electronics, with the company’s share price still holding strong. And customer perception of Samsung phones, according to a poll, is also largely unaffected.

Basically, even with the unfortunate events of the Note 7 fires, people are still willing to shell out money to buy Samsung products.

No wonder Note 7 users in countries like Nigeria refuse to return the phones and get their money back. That is how much people still trust Samsung phones.

For Samsung SDI though, the business of shoring up client’s confidence still goes on. Notices were sent out to clients assuring them that only the Note 7 batteries had issues.

The company also informed people who needed to know that they have improved safety standards in the battery production process by setting up a team dedicated to ensuring safety of products.

Also customers were encouraged to sent their own teams to the factories to make sure the batteries made for their devices were top-notched.

The major downside of these new measures is that batteries would be delivered late. But then, that should be a little price to pay to ensure the safety of users of these expensive devices.

Samsung SDI battery
Samsung SDI CEO Nam Seong Cho

Before this current setback for Samsung SDI, the renowned battery maker was facing a crisis related to the slowing demand for smartphones around the world. Which invariably meant fewer orders for batteries.

So the timing of the Note 7  crisis was very bad for the company’s operations. Building customer’s confidence alone is going to take a lot out of them. However, that is something that is achievable and is within their control.

On the hand, the economic recession affecting smartphones demand worldwide is something they can’t control. So even if they succeed in retaining all their customers, there is still the problem of the demand side of the business, something they have no control over.

To put it mildly, it is going to be a long time before Samsung SDI executives start smiling again.

Source: Reuters.


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